Indonesia's outgoing President Joko Widodo will appoint Thomas Djiwandono, the nephew of president-elect Prabowo Subianto and his adviser for fiscal issues, as a deputy finance minister later on Thursday, a senior politician said.

Sufmi Dasco Ahmad, a senior member of Prabowo's Gerindra political party confirmed Reuters' earlier report of the planned appointment, adding Djiwandono will serve in the same role after Prabowo's term officially starts in October.

Djiwandono, the presidential palace and the finance ministry did not respond to a request for comment.

The appointment was intended "to smooth the transition of government from the administration of Mr. Jokowi to Mr. Prabowo," Dasco told Reuters, referring to the current president by his popular nickname.

The rupiah fell about 0.4% against the U.S. dollar during early Thursday trading, the biggest drop among emerging Asian currencies.

Djiwandono will work with Widodo's current, well-respected finance minister, Sri Mulyani Indrawati, who has won plaudits for prudent fiscal policy, including her finance management during the COVID-19 pandemic.

Financial markets have been paying close attention to Prabowo's pick for finance minister and his fiscal policy proposals after ratings agencies warned risks could rise due to his costly campaign promises, which include a flagship programme to provide free school meals.

Concerns of rising debt during Prabowo's upcoming administration had previously added to pressure on the rupiah and Indonesian bond prices.

U.S.-educated Djiwandono has been the main spokesperson for Prabowo's fiscal stance, often reiterating the incoming president's commitment to abiding by fiscal rules and keeping the 2025 budget deficit under the legal limit of 3% of gross domestic product.

Djiwandono previously worked in a securities firm in Hong Kong and for the Arsari Group, an Indonesian conglomerate led by Prabowo's brother Hashim Djojohadikusumo, according to his profile on the official Gerindra party website. Djiwandono also serves as the party's chief treasurer.

"We hope Dijwandono's appointment will lead to better communication on fiscal synergy and the programmes proposed during the campaign can be implemented in a prudent manner ... according to our fiscal conditions," said Myrdal Gunarto, an economist with Maybank Indonesia.

The appointment should have a neutral impact on markets as there has been no change in the fiscal numbers, he said, adding that the rupiah's drop was likely due to external factors.